Does a Real Estate Contract Affect Your Property?

Per E. Oscarsson, Edmonds Lawyer

Real estate contracts were a common form of providing for the purchase and sale and financing of real estate. Under real estate contracts, the buyer purchased the property from the seller and agreed to pay the seller the balance of the purchase price in installments.  (Real estate contracts are to be distinguished from the now more commonly used real estate purchase and sale agreement which provides for the purchase of real estate, but does not provide terms of financing. Such terms are often in a promissory note and deed of trust that secures payment of the promissory note.) Often, the term of the real estate contract was twenty-five to thirty years and installments were paid monthly. Title to the real estate remained in the seller until the entire contract amount had been paid in full. When the contract amount had been paid in full, a contract fulfillment deed was to be recorded in the county real estate records. This deed transferred title from the buyer to the seller.

Failure to complete this final step, recording the contract fulfillment deed, can cause and has caused significant issues years, even decades, after the contract has been paid in full. If the buyer under the real estate contract has possession of the property and tries to sell it, a title report will reflect that they do not hold title to the property. Sometimes, the buyer has died, the property is distributed to their heirs and the heirs try to sell the property, but find out from a title report that their ancestor did not have title to the property.

How to resolve the issue? The best resolution is that the fulfillment deed was signed and notarized and is being held by someone, but was never recorded. Find out who is holding the original, get it and record it. If that can’t be done, and the sellers are still alive, they could sign a fulfillment deed that can be recorded. If the sellers are no longer alive, their heirs would need to be located and asked to sign a fulfillment deed. If heirs can’t be found, a lawsuit may be necessary to quiet title. As you might imagine, the cost of resolving the issue increases the further you have to follow this path and the time necessary to resolve the issue could increase significantly.

The moral of the story? Find out whether you have record title to your property. If you bought your property, your title insurance policy should reflect your record title. If you acquired the property in another way, such as by inheritance or gift, you may want to order an appropriate form of title report from a title insurance company.

To learn more about Does a Real Estate Contract Affect Your Property?, please contact Beresford Booth at or by phone at (425) 776-4100.

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